RBC is under investigation by Competition Bureau Canada for allegedly misleading Canadians about its climate performance.
At the centre of the complaint is RBC’s claim it supports the Paris Agreement’s goals, including holding global warming to no more than 2 C. The complaint also takes aim at the bank’s pledge to provide $500 billion in sustainable financing by 2025.
Representatives from the Skat’sin te Secwepemc-Neskonlith Indian Band as well as environmental groups Banking for a Better Future, Stand.earth and others who filed the complaint say these claims are misleading because the bank is investing billions of dollars in fossil fuels — the main driver of the climate crisis — and its definition of “sustainable” finance doesn’t require the money to actually be used for climate purposes.
“As such, the Applicants assert that RBC’s representations are materially false and misleading and are made for the purpose of promoting RBC’s reputation and attracting and retaining clients who are concerned about climate change,” the complaint reads.
“RBC’s representations reflect the ambitious climate action that consumers want to see, however, RBC’s financial services undermine the climate goals it claims to support.”
If Competition Bureau Canada finds RBC has misled the public, the bank could be subjected to a $10-million fine, which the complainants recommend should be split between Canada’s Environmental Damages Fund, and an organization doing climate work in Canada. The regulator could also require RBC to stop calling itself a supporter of the Paris Agreement in its public communications.
Filed in April, the complaint highlights the gulf between the bank’s words and actions. For example, while stating it supports the Paris Agreement, RBC has provided over US$200 billion to fossil fuel companies since the landmark climate agreement was signed in late 2015. The complaint also notes that from 2016 to 2021, RBC loaned or invested over $50 billion to companies expanding fossil fuel production.
RBC’s fossil fuel investments and lending have catapulted it to become the planet’s fifth-largest financier of coal, oil and gas. Among Canadian banks, it’s the top financier of fossil fuels.
Moreover, the complaint calls RBC’s goal of providing $500 billion worth of sustainable finance by 2025 “false and misleading” because “RBC’s definition of sustainable financing is not linked to the reduction of GHG [greenhouse gas] emissions or climate-related risks.”
“RBC’s representations reflect the ambitious climate action that consumers want to see, however, RBC’s financial services undermine the climate goals it claims to support," the complaint alleges.
The complaint points to RBC’s “sustainability-linked” lending to Enbridge as a prime example.
Sustainability-linked lending allows a company to pay back a loan with a lower interest rate if it can meet a self-imposed environmental, social or governance target — like improving the gender or racial diversity of its board of directors, for example, or lowering the greenhouse gas emissions produced per unit.
As previously reported by Canada’s National Observer, RBC was one of several financial institutions that loaned Enbridge more than $1 billion last year to help the company expand its pipeline network as part of a “sustainability-linked” loan. That example was later cited in a resolution at RBC’s annual meeting that, if passed, would have stopped the bank from lending to fossil fuel companies under the sustainability banner.
The Competition Bureau complaint also accuses RBC of lacking a “credible” plan for how it will slash greenhouse gas emissions. Despite the bank adopting a net-zero target and joining the global Net-Zero Banking Alliance, which requires it to align its portfolio with 1.5 C warming, the bank has not yet published a plan that shows how it will phase out fossil fuels.
RBC is expected to publish new targets to reduce its emissions ahead of the United Nations climate conference COP27, set to take place in November, but no details are available yet.
“RBC strongly disagrees with the allegations in the complaint, and believes the complaint to be unfounded and not in line with Canada’s climate plan,” RBC spokesperson Andrew Block told Canada’s National Observer.
“RBC has been engaging with our clients, partners and other stakeholders, working towards solutions to help Canada meet its net-zero commitments. It’s critically important that we get the transition to net-zero right in order to address climate change and we have taken a measured, thoughtful and deliberate approach in our climate strategy.”
A recent open letter from 19 civil society organizations called on RBC to adopt policies that slash its financed emissions in half by 2030 to stay aligned with the 1.5 C target as well as policies to ensure the rights of Indigenous Peoples are upheld. It also called on RBC to “(sever) ties with TC Energy and Coastal GasLink, which threaten critical ecosystems and waterways and does not have the consent of Wet’suwet’en hereditary chiefs.”
As Canada’s National Observer has previously reported, RBC is on the defensive against climate groups looking to force it to strengthen its climate plans. At its annual general meeting in April, the bank fought off proposals from shareholder activist groups like Investors for Paris Compliance that would have required it to adopt stricter climate policies. The proposals did not pass.
Competition Bureau Canada is increasingly making greenwashing a priority.
“It’s the bureau’s job to protect the integrity of the marketplace, and that includes consumer confidence in the green economy,” Competition Bureau Canada commissioner Matthew Boswell recently said.
“We see environmental claims everywhere, but they’re not all legit. Greenwashing, the practice of making false or misleading eco-claims about a product or service, is on the rise.”
In January, the regulator fined Keurig Canada $3 million over false and misleading claims about the recyclability of its single-use coffee pods. At the time, Boswell stressed that presenting products as being greener than they are is illegal and harms consumers.